Hospitals Worry About Mandate Loss

Hospitals fear loss of insurance payments if coverage mandate is struck down

Leaders say situation would deteriorate further if Obama administration pushes ahead with reimbursement cuts even if provision is eliminated

By Peter Frost, Chicago Tribune reporter

11:21 AM CDT, March 29, 2012



Like their counterparts across the country, Chicago hospitals have invested millions of dollars preparing for the implementation of the federal health care law, potentially for benefits they may never reap if the U.S. Supreme Court strikes down key parts of the law.

The court, which wrapped up three days of hearings Wednesday, is considering whether a requirement that most Americans carry health insurance or pay a penalty violates the Constitution.

In their final day of hearings, justices indicated they may throw out other parts of President Barack Obama’s health care law if they strike down the mandate, which is expected to expand insurance to about 30 million Americans.

“This is one of those things where you have to be careful what you wish for,” said Dr. Lee B. Sacks, executive vice president and chief medical officer for Advocate Health Care, the region’s largest health group. “The consequences of striking down the law may be far worse than dealing with the changes (the law required) over a several-year period.”

The American Hospital Association argued in a brief to the court that the bill could hurt hospitals’ finances if the individual mandate is the only portion of the law to be struck down or altered.

Hospitals expected a wave of newly insured patients to offset cuts to government reimbursement for programs like Medicare and Medicaid called for under the law. They fear they may be squeezed by declining payments without the benefit of an influx of new patients.

If the court finds the law unconstitutional, the government may press ahead on plans to cut reimbursements in a effort to rein in spending, an initiative Sacks says “won’t serve patients and won’t lead to better access and more equitable care.”

“In the short term, there will be a significant number of uninsured (patients) that we won’t get compensated for, and that becomes a barrier to access and forces us to shift costs to other payers,” Sacks said.

Paula M. Noble, chief financial officer at Children’s Memorial Hospital in Lincoln Park, said the hospital is concerned that if the court strikes the law in its entirety, some of the hospital’s patients would lose benefits that have already been implemented. Specifically, she fears that they would lose their private insurance coverage because of pre-existing conditions or if they exceed lifetime caps on coverage.

Instead, she said, those patients would be forced to rely on Medicaid, a chronically underfunded program that is facing “devastating cuts.”

“This would create further challenges for Children’s Memorial, other hospitals and the state of Illinois,” she said.

At the same time, however, hospital executives argued that regardless of whether the law stays intact, a series of meaningful and transformative changes that it spurred in the industry will continue.

Combined with the economic recession, the 2010 law sharpened hospitals’ focus on driving efficiency by coordinating patient care and automating health care records, two initiatives that allowed hospitals to become more clinically integrated, said Mark Newton, president and chief executive of Swedish Covenant Hospital.

Those improvements help hospitals offer better care to patients and better value to payers, he said.

“Regardless if the law stands, there are certain changes occurring where I think some good things will result,” Newton said. “Even if (the court) throws the whole thing out, there are some residual positives that came out of this, and, if nothing else, it gives Congress a chance to go back and really look at what’s working and what’s not.”